Correlation Between Shin-Etsu Chemical and Kuraray
Can any of the company-specific risk be diversified away by investing in both Shin-Etsu Chemical and Kuraray at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shin-Etsu Chemical and Kuraray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Etsu Chemical Co and Kuraray Co, you can compare the effects of market volatilities on Shin-Etsu Chemical and Kuraray and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shin-Etsu Chemical with a short position of Kuraray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin-Etsu Chemical and Kuraray.
Diversification Opportunities for Shin-Etsu Chemical and Kuraray
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shin-Etsu and Kuraray is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shin Etsu Chemical Co and Kuraray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kuraray and Shin-Etsu Chemical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shin Etsu Chemical Co are associated (or correlated) with Kuraray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kuraray has no effect on the direction of Shin-Etsu Chemical i.e., Shin-Etsu Chemical and Kuraray go up and down completely randomly.
Pair Corralation between Shin-Etsu Chemical and Kuraray
Assuming the 90 days horizon Shin Etsu Chemical Co is expected to under-perform the Kuraray. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shin Etsu Chemical Co is 1.93 times less risky than Kuraray. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Kuraray Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,600 in Kuraray Co on November 3, 2024 and sell it today you would lose (76.00) from holding Kuraray Co or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shin Etsu Chemical Co vs. Kuraray Co
Performance |
| Timeline |
| Shin Etsu Chemical |
| Kuraray |
Shin-Etsu Chemical and Kuraray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin-Etsu Chemical and Kuraray
The main advantage of trading using opposite Shin-Etsu Chemical and Kuraray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin-Etsu Chemical position performs unexpectedly, Kuraray can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kuraray will offset losses from the drop in Kuraray's long position.| Shin-Etsu Chemical vs. BASF SE NA | Shin-Etsu Chemical vs. BASF SE ADR | Shin-Etsu Chemical vs. Braskem SA Class | Shin-Etsu Chemical vs. Celanese |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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